If you\u2019ve been thinking about offering a 401(k) to your employees \u2014 or improving your own retirement savings as a business owner \u2014 Q3 is when the clock starts ticking<\/strong>. For Safe Harbor 401(k) plans, you can\u2019t wait until the end of the year.<\/p>\n To have your plan up and running for 2025, you must have documents signed and employee deferrals in place no later than October 1, 2025<\/strong>. That\u2019s not just a best practice \u2014 it\u2019s the IRS requirement known as the three-months-left rule<\/em>.<\/p>\n In this article, we\u2019ll break down:<\/p>\n A Safe Harbor 401(k) is a retirement plan designed to meet specific IRS requirements that automatically satisfy certain nondiscrimination tests<\/strong>.<\/p>\n That\u2019s a big deal if you\u2019re a small to mid-sized business where owners and higher earners often end up restricted on how much they can contribute to their own retirement.<\/p>\n With a traditional 401(k), the IRS tests contributions each year to ensure the plan isn\u2019t too top-heavy. If employees aren\u2019t contributing enough, owners and key employees might have to take money out<\/em> of their accounts \u2014 sometimes years later \u2014 in a process called \u201ccorrective distributions.\u201d<\/p>\n A Safe Harbor 401(k) avoids this headache by requiring the business to make minimum contributions for employees<\/strong>, usually in one of these ways:<\/p>\n In exchange for committing to one of these formulas, the IRS waives certain annual tests, giving business owners the freedom to contribute up to the annual 401(k) maximum without worrying about refunds.<\/p>\n If you run a construction company, real estate business, or other closely held operation, you probably face one or more of these challenges:<\/p>\n A Safe Harbor plan addresses all three:<\/p>\n The IRS requires that a new Safe Harbor 401(k) be in place for at least three months<\/strong> during the plan year.<\/p>\n Since most plans run on a calendar year (January\u2013December), that means the plan must:<\/p>\n If you miss October 1, you\u2019ll have to wait until January 1, 2026, to start \u2014 which means losing a whole year of potential tax savings and employee benefit.<\/p>\n Q3 (July\u2013September) is the practical window to act because:<\/p>\n For many contractors and small business owners, September is also when work is still steady before winter slowdowns, making it a logical time to finalize benefits planning.<\/p>\n Here\u2019s what the process typically looks like:<\/p>\n Before you commit, run the numbers. Your advisor can show you:<\/p>\n Decide whether you\u2019ll offer a matching contribution<\/strong> (only to those who contribute) or a non-elective contribution<\/strong> (to all eligible employees). Each has different retention and cost implications.<\/p>\n Look for a provider who:<\/p>\n Your provider will prepare the legal plan document and Safe Harbor notice. This must be finalized before the plan starts.<\/p>\n You must give eligible employees a Safe Harbor notice at least 30 days before the plan starts<\/strong>. For an October 1 start, that means notices must go out by September 1<\/strong>.<\/p>\n Set up deferral percentages, employer contributions, and compliance tracking with your payroll provider.<\/p>\n Setting up a Safe Harbor 401(k) before October 1, 2025, gives you:<\/p>\n If you don\u2019t act by October 1:<\/p>\n If you want the peace of mind, higher contribution limits, and tax advantages of a Safe Harbor 401(k) for 2025, your real deadline is October 1, but your action window is Q3<\/strong>.<\/p>\n Don\u2019t wait until fall chaos sets in \u2014 start the conversation with us today. Call us at (402) 932-8815.<\/p>\n Sincerely, Serving you through a thoughtful client experience, wise long-term perspective, and very experienced staff<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Secure a Safe Harbor 401(k) Before October 1: Why Q3 Is Your Window of Opportunity If you\u2019ve been thinking about offering a 401(k) to your employees \u2014 or improving your own retirement savings as a business owner \u2014<\/p>\n","protected":false},"author":2,"featured_media":1019,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0},"categories":[14,12,13],"tags":[39,109],"_links":{"self":[{"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/posts\/1017"}],"collection":[{"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/comments?post=1017"}],"version-history":[{"count":2,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/posts\/1017\/revisions"}],"predecessor-version":[{"id":1020,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/posts\/1017\/revisions\/1020"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/media\/1019"}],"wp:attachment":[{"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/media?parent=1017"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/categories?post=1017"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.westevens.com\/blog\/wp-json\/wp\/v2\/tags?post=1017"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}\n
\nWhat is a Safe Harbor 401(k)?<\/h2>\n
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\nWhy Safe Harbor 401(k)s Are a Win for Contractors and Closely Held Businesses<\/h2>\n
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\nThe October 1 Deadline and the \u2018Three-Months-Left\u2019 Rule<\/h2>\n
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\nWhy Q3 Is Decision Time<\/h2>\n
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\nSteps to Set Up a Safe Harbor 401(k) Before October 1<\/h2>\n
1. Consult Your CPA or Financial Advisor<\/h3>\n
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2. Choose Your Safe Harbor Formula<\/h3>\n
3. Select a Plan Provider<\/h3>\n
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4. Draft and Sign Plan Documents<\/h3>\n
5. Communicate With Employees<\/h3>\n
6. Coordinate Payroll and Recordkeeping<\/h3>\n
\nThe Tax Benefits for 2025<\/h2>\n
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\nWhat Happens if You Miss the Deadline?<\/h2>\n
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\nBottom Line<\/h2>\n
\nW. E. Stevens, PC<\/p>\n